Hawaii Housing Prices...How Low Will They Go (Honolulu, Princeville: sales, real estate)
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Let me preface this post by saying I'm not an economist, politican, banker or a real estate agent. I just want to hear what others think. How low will the average price of a house be once the market bottoms out? I don't believe what our so-called experts have been saying all along, I believe we could possibly be looking at a major drop in housing prices over the next few years or longer. How low and when, I haven't the faintest idea. Is a median price of 350K for a single family home on Oahu possible?
Let me preface this post by saying I'm not an economist, politican, banker or a real estate agent. I just want to hear what others think. How low will the average price of a house be once the market bottoms out? I don't believe what our so-called experts have been saying all along, I believe we could possibly be looking at a major drop in housing prices over the next few years or longer. How low and when, I haven't the faintest idea. Is a median price of 350K for a single family home on Oahu possible?
I think it's very possible. In fact, maybe even lower. When the depression strikes, things will get real bad. How bad? Dunno, but me thinks worse than the 1929 Depression, according to what many experts are saying. Better to pay off your debts, save and store house essentials than look for housing. When housing does drop to record lows, interest rates will have already skyrocketed. Besides, who says you'll still have a job?
I think it's very possible. In fact, maybe even lower. When the depression strikes, things will get real bad. How bad? Dunno, but me thinks worse than the 1929 Depression, according to what many experts are saying. Better to pay off your debts, save and store house essentials than look for housing. When housing does drop to record lows, interest rates will have already skyrocketed. Besides, who says you'll still have a job?
Although I think the economy is heading for a very deep and long lasting recession, a second Great depression cannot be ruled out. Because of this, I agree with you that housing prices will drop...I am curious to see how fast. You think 275K for house is possible? Wow, very scary!
I don't think housing prices in Hawaii will drop too significantly due to the wealth spread around the islands. Travel will continue, tourists will spend money which means employed people will keep their jobs for the most part.
But if the hotel industry, which will be affected first, suffers too greatly, then this will create a domino effect and then it could be very possible that home prices will decline sharply. People will no longer be able to afford their homes and have to sell. And if moving to an apartment/condo/lesser home is still unaffordable, they may have to move to the mainland. This could leave island homes vacant/available and eventually have to be sold at reduced prices in order for the owner's to recoup their investments.
But then I am from Wisconsin, never been to Hawaii, so what do I know! LOL!
I expect to see the prices go below the 2001 prices whatever they were for the area you are looking at. The whole housing market in Hawaii runs in about seven to eight year cycles and we are on the down ward slope. This time there will be a huge economic crisis to drop the prices even lower. Finding financing will be the problem. Sellers who can owner finance should be able to sell their properties.
Many homes in HI are owned by people on the mainland whose wealth is dependent on the economy, stocks, international market, etc. If their net worth hits bottom, second and/or vacation homes will be one of the first things they will liquidate. We used to visit the islands once a year for a month or so, but due to economy, high airline costs, we now head to the carribbean islands instead. We love HI, but financially it is no longer feasible.
I expect to see the prices go below the 2001 prices whatever they were for the area you are looking at. The whole housing market in Hawaii runs in about seven to eight year cycles and we are on the down ward slope. This time there will be a huge economic crisis to drop the prices even lower. Finding financing will be the problem. Sellers who can owner finance should be able to sell their properties.
I would agree, at least 2002 prices, probably slightly lower to 2001 or 2000, for most areas. Some small enclaves will be more insulated from the severe drops, but every area will drop, even those that haven't yet. The reason for at least 2001-2002 pricing most places (not all) is because loans are much harder to come by than for decades, and because that time frame was the last time most areas had some reasonable pricing-to-income ratios, even if a vacation home.
The highest price points are more insulated from the credit crunch because people pay cash, but even those will drop because people with the money will have less available credit for other business or personal pursuits, and instead of buying the 5 mil home, may not be able to resist the 2 mil home down the street.
Where I live in California we have seen drops of up to 40-55% off the high point. My house is currently worth about 49% less than its high point (but we're fine thank you!). But drops happen unevenly by area, with some areas in this state that started dropping later still in free fall. Maybe a few exclusive areas will only ultimately be hit by 20%, we'll see. And now there are plenty of willing buyers, but they are not able to always obtain a loan, even fixed, because the guidelines are very steep now, and lenders don't want to lend on a property they think will drop by more than 10% in the near future, even if it is a 30-year fixed being asked for. They will ask for the amount extra in cash, or will rate it with a 10% down and a 10% expected drop as 100% financing, and decline.
And so on. If an area was isolated from appreciation for the last number of years, it is probably more protected from drops, like some states on the Mainland.
But the sky will clear in the next 2-5 years, depending on the area. As I posted in another place, an area's drop much depends on how many of the homes in that area are financed on other-than-30-year-fixed. There are still many 5, 7, and 10 year fixed's that will be hitting reset dates, and will be upside down at that point, probably meaning foreclosure 99% of those cases, even if monied people. I know someone here with 100K in the bank liquid (plus retirement, etc), but upside down on 3 properties, considering letting them go and maintaining credit on the primary residence. She knows she'll burn through that 100K in no time on those other 3 properties. She's already "bleeding" a couple grand a month with the payment increases she cannot finance out of. How many think like that? Probably a lot. And at one time she was looking at buying a condo in Hawaii. They've made as much as 300K a year. That's some of the buyer types Hawaii does not currently have.
Curious, does anyone know the percentage of foreigners owning real estate in Hawaii? Yet the financial crises is now a world one, so Hawaii is not insulated.
- the slowing tourism numbers and $$$
- the slowing building industry
- unemployment
- hyperinflation
- rising shipping costs and shortages of food and other essentials
If many of these things happen, I see no way the Hawaii housing prices won't be falling sharply, and even though this most recent real estate bubble included a lot of "outside" money, the economies in Asia and the Mainland are in real danger too.
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